Dow announces expansion of Middle Eastern efforts

Published 8:00 pm, Monday, May 31, 2004

The Dow Chemical Co. and Petrochemical Industries Company of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation, announced today the formation of two new joint ventures.

Dow and PIC will form MEGlobal, a 50-50 global joint venture for the manufacture and marketing of merchant monoethylene glycol and diethylene glycol (EG), and Equipolymers, another 50-50 global joint venture for the manufacture and marketing of polyethylene terephthalate resins and the manufacture of purified teraphthalic acid.

Last year, the two announced plans to construct Olefins II, a new ethylene and derivatives complex and a new ethylbenzene/styrene unit in Shuaiba, Kuwait.

The four projects will build on the relationship in EQUATE Petrochemical Company between PIC and Union Carbide Corporation, a wholly owned subsidiary of Dow.

The projects combine Dow's existing asset base, technology position and market presence with PIC's commitment to increasing its investment in downstream petrochemical markets.

"These announcements mark an important step in the development of Dow's strategy of pursuing cost advantaged feedstock positions to supply growing markets," said William S. Stavropoulos, chairman and chief executive officer of Dow. "This business model reduces Dow's capital intensity while improving our ability to serve our customers for the long term. MEGlobal and Equipolymers strengthen the integration of these ethylene derivative businesses by strategically shifting future growth to cost-advantaged locations."

The ventures also represent PICs largest investment to date outside of Kuwait, said Mr. Saad Al-Shuwaib, chairman and managing director of PIC. "These further investments with Dow represent an important milestone in developing PIC's strategy to expand its participation in the global petrochemical industry."

To form MEGlobal, Dow will sell to PIC a 50 percent interest in its Canadian ethylene glycol assets. MEGlobal will purchase ethylene from Dow. MEGlobal will also market the excess EG produced in Dow's plants in the United States and Europe, and may also market the EG produced by Dow and PIC affiliates.

To form Equipolymers, Dow will sell to PIC a 50 percent interest in its PET/PTA business which includes assets in Germany and Italy.

PIC is one of six specialized subsidiaries of the state-owned Kuwait Petroleum Corporation. It produces fertilizer and petrochemicals.